IMF Chief Wants Trust for Middle-Income Nations Set by Year-End
The head of the International Monetary Fund said that she hopes that members will finalize plans for a trust for redirecting new reserves to vulnerable low-middle-income countries and small island economies by year-end.
The fund will be working “relentlessly” on the so-called Resilience and Stability Trust in the next months, Managing Director Kristalina Georgieva said during a fund event Wednesday. Initial on-lending of the reserve assets, called special drawing rights, will continue to be to low-income countries interest free via the IMF’s Poverty Reduction and Growth Trust, she said on a panel at an online fund event.
Creating the additional trust “would take us a little bit of time because it is new -- it’s not like expanding the operation of an existing entity,” Georgieva said. “But my aspiration is to have it by the end of the year. It’s so important to use COP 26 to mobilize the world for action,” she said, referring to the United Nations Climate Change Conference taking place in the first half of November.
The IMF is preparing to give its member countries the biggest resource injection in its history -- $650 billion -- to boost global liquidity and help emerging and low-income nations deal with mounting debt and Covid-19. Georgieva expects the fund’s board of governors to vote on the proposed SDRs by mid-August.
The Group of Seven biggest advanced economies signaled its support behind efforts to reallocate $100 billion of potential new IMF reserves from richer nations to more vulnerable ones to aid their recovery from the pandemic.
Reserves potentially lent to low-middle-income countries and small island states like Barbados would be destined to address health and climate risks, Georgieva said in a separate interview with Bloomberg Television’s Haslinda Amin.
“The target has to be countries that are highly vulnerable to these risks, and we can help them build resilience to sustain them,” she said.
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